Income Tax Appellate Tribunal - Chennai
Sivasakthi Educational ... vs The Income Tax Officer (Exemptions), ... on 16 April, 2026
आयकर अपीलीय अिधकरण, 'ए' ायपीठ, चे ई।
IN THE INCOME TAX APPELLATE TRIBUNAL
'A' BENCH: CHENNAI
ी एबी टी. वक , ाियक सद एवं सु ी पदमावती यस, लेखासद के सम"
BEFORE SHRI ABY T. VARKEY, JUDICIAL MEMBER AND
MS. PADMAVATHY.S, ACCOUNTANT MEMBER
आयकर अपील सं ./ITA No.3614/Chny/2025
िनधा$रण वष$ /Assessment Year: 2019-20
M/s. Sivasakthi Educational Trust, The Income Tax Officer,
No.5/54, KN Road, Thalainagar, Vs. Exemption ward,
3rd St. Vedaranyam Taluk, Trichy.
Nagapattinam - 614 712.
PAN: AAVTS 2872F
(अपीलाथ /Appellant) ( यथ /Respondent)
अपीलाथ की ओर से/ Appellant by : Mr. B.Ramakrishnan, FCA
()थ की ओर से /Respondent by : Mr. C. Sreekumar, JCIT
सुनवाई की तारीख/Date of Hearing : 08.04.2026
घोषणाकी तारीख /Date of Pronouncement : 16.04.2026
आदे श / O R D E R
PER PADMAVATHY.S, A.M:
This appeal by the assessee is against the order of the Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre (NFAC), Delhi, (in short "CIT(A)") passed u/s. 250 of the Income Tax Act, 1961 (in short "the Act") dated 22.09.2025 for Assessment Year (AY) 2019-20. The grounds raised by the assessee are as under:
"1. The order of the Learned Commissioner of Income Tax (Appeals), NFAC, is contrary to the law, facts and circumstances of the case.
2. For that the Learned Commissioner of Income Tax (Appeals), NFAC, had erred in confirming the action of the Assessing Officer in treating the contribution of the trustees amounting to Rs.20,50,000/- as donation ITA No.3614/Chny/2025 Sivasakthi Educational Trust :- 2 -:
instead of liabilities as shown in the Balance Sheet, thereby increasing the annual gross receipts to Rs. 1,18,29,371/- as against the actual gross receipts of Rs. 97,79,371/-, shown in the Income and expenditure account and consequently holding that the gross receipts exceeded Rs.1 Crore and denying the appellant's claim for exemption under section 10(23C)(iiiad) of the Income Tax Act, 1961.
3. For that the Learned Commissioner of Income Tax (Appeals), NFAC, erred in further holding that the appellant did not have valid approval from Competent Authority of running the said educational institutions, when actually the appellant had duly obtained approval to run educational institutions up to the Primary level (up to V Standard) from the Primary Education Officer, Nagapattinam, which was submitted to the CIT(A) in the appellate proceedings.
4. For that the Learned Commissioner of Income Tax (Appeals), NFAC, erred in upholding the Assessing Officer's action of bringing to tax the surplus of Rs.38,65,595/-, shown in Income and Expenditure Account is not for application for educational purposes.
For these grounds and such other grounds that may be adduced before or during the hearing of the appeal, it is prayed that the Hon'ble Tribunal may be pleased to direct the Assessing Officer to accept the returned income and grant exemption under section 10(23C)(iiiad) ofthe Income Tax Act, 1961 and quash the assessment order dated 16.03.2021 and the CIT(A), NFAC order dated 22.09.2025."
2. The assessee is a charitable trust and filed a return of income for A.Y 2019-20 on 28.06.2020 declaring Nil income. The assessee subsequently filed the revised return of income on 08.07.2020 and in the said revised return the assessee has claimed Rs. 97,79,371/- as exempt income u/s. 10(23C)(iiiad) of the Act. The case was selected for scrutiny and the statutory notices were duly served on the assessee. The A.O called on the assessee to furnish details pertaining to expenditure towards educational activity during the year under consideration and the details as to how the assessee is entitled to claim exemption u/s. u/s. 10(23C)(iiiad) of the Act when the receipts of the assessee during the year under consideration are more than Rs.1 Crore. The assessee submitted before the A.O that the assessee is in the process of development and construction of school building and the gross receipts along with trustees ITA No.3614/Chny/2025 Sivasakthi Educational Trust :- 3 -:
contributions and bank loans were fully utilized towards the object of the trust. The assessee further submitted that the receipts during the year is less than Rs.1 crore and the contributions towards corpus cannot be considered for the purpose of exemption u/s.10(23C)(iiiad) of the Act. The assessee also submitted that the assessee has obtained provisional approval for running of kinder garden school on 13.04.2018 and that the No Objection for Central Board of Secondary Education (CBSE) affiliation was received only in the fag end of the year i.e.08.03.2019. The assessee accordingly submitted that the assessee has incurred expenses towards education purpose. The A.O did not accept the submissions of the assessee and held that the assessee has not fulfilled the conditions mentioned in section 10(23C)(iiiad) of the Act and accordingly treated the surplus amount to the tune of Rs. 38,65,595/- as the income of the assessee. Aggrieved, the assessee filed further appeal before the CIT(A) who upheld the order of the A.O. The assessee is in appeal before the Tribunal against the order of the CIT(A).
3. The Ld. Authorized Representative (AR) of the assessee submitted that the assessee trust was formed on 29.12.2017 to run an educational institution of international standard and the copy of initial approval to run the nursery school was obtained on 13.04.2018. The Ld. AR further submitted that the assessee trust started collecting fees and donations during the year under consideration and the total receipts of the trust came to Rs. 97,79,371/- which is less than Rs.1 Crore. The Ld. AR also submitted that the A.O while considering the exemption u/s. 10(23C)(iiiad) of the Act has included the corpus contribution from the trustees to the tune of Rs.20,50,000/- to come to the conclusion that the assessee is not fulfilling the conditional prescribed u/s. 10(23C)(iiiad) of the Act. With regard to the above submissions, the Ld. AR ITA No.3614/Chny/2025 Sivasakthi Educational Trust :- 4 -:
placed reliance on the decision of the Coordinate Bench of the Tribunal in the case of M/s. Sathyam Educational and Charitable Trust vs. ITO (ITA No.611 & 612/Chny/2022 dated 06.04.2023). The Ld. AR submitted that since the assessee obtained the NOC to run CBSE school only on towards the fag end of the FY 2018-19 the income and expenditure account included expenses towards running nursery school alone and that the assessee is in the process of construction of school building to run CBSE school. The Ld. AR argued that the fact that the assessee has obtained the approval and has collected fees from the students substantiates the fact that the assessee is established for the purpose of education thereby the assessee is fulfilling the conditions prescribed u/s. 10(23C)(iiiad) of the Act.
4. The Ld. Departmental Representative (DR), on the other hand, relied on the orders of the lower authorities.
5. We have heard the parties, and perused the material available on record. The assessee during the year under consideration claimed exemption u/s. 10(23C)(iiiad) of the Act. The A.O denied the said exemption on the ground that the assessee has not incurred any expenditure towards educational purpose during the year under consideration and that the total receipts of the assessee exceeds Rs.1 Crore. In this regard, we notice that the A.O has included a sum of Rs.20,50,000/- received by the assessee as contribution from the trustees and that without including the said contribution the receipts in the hands of the assessee for the year under consideration is less than Rs.1 Crore. We further notice that the Coordinate Bench in the case of M/s. Sathyam Educational and Charitable Trust (supra) has considered the issue of whether corpus donations should be included for the purpose of exemption u/s. 10(23C)(iiiad) of the Act, and held that:
ITA No.3614/Chny/2025Sivasakthi Educational Trust :- 5 -:
"8. At the outset, the Ld.AR submitted that disallowance made by the AO u/s.10(23C)(iiiad) of the Act, by clubbing corpus fund with other receipts is not justified for the submissions of the assessee. As per provisions of Sec.10(23C)(iiiad) of the Act, the aggregate annual receipt of the school should be the receipts collected for Rs.49,19,960/- only. The corpus donation received with specific direction by the Trust to develop infrastructure for Rs.72,18,000/- is a capital receipt and the same cannot be taxed in the hands of the assessee, irrespective of the fact whether registration u/s.12AA of the Act, has been granted or not. To substantiate its contentions, the assessee drew our attention to the order of the Ld.CIT(A), wherein, the Ld.CIT(A) has not discussed the matter on merits, have decided the same on the basis of technicalities that there is no mistake apparent from the records and concluded that the AO has correctly dismissed the rectification petition of the assessee.
9. To fortify the argument on the assessee's claim, the Ld.AR placed before us and relied upon the following judicial pronouncements having similarities with the case and issue in hand:
1.ACIT v Shiksha Samiti (2015) 38 ITR (Trib) 616 Delhi, dt. 16-2-2015- AY 200809 (Followed Jat Education society (supra), and Sh. Mahadevi Tirath Sharda Maa Seva Sangh Vs ITO in ITA No. 1091/Chd/2009 Order dt 29.01.2010) In this case the AO issued notice u/s. 148 for reopening the assessment on the grounds that the annual receipts (capital and revenue) for the year under consideration exceeded Rs.1.00 crore and as such it is not eligible for exemption u/s.10(23C)(iiiad). During the assessment proceedings, AO noted that the AR of the assesse has submitted that the receipts of the society are only Rs.60,24,857/and an amount of Rs.39,14,102/- was received as donation towards corpus fund. The AO held that the receipts of the society exceeded Rs.1.00 Crore and therefore exemption u/s 10(23C)(iiiad) is not allowed. The AO thus made the assessment vide his assessment order dated 19.12.2011 passed u/s.148/143(3) of the IT Act CIT (A) allowed the exemption aggrieved the Dept. Went in appeal before the Hon. ITAT, which upheld CIT(A)'s order and held that:
The amounts contributed, as corpus donations for Infrastructure development shall form part of corpus would not constitute income of the society. Therefore, the receipts of the educational institution are below Rs.1.00 Crore and as such exemption u/s 10 (23C)(iiiad) is allowable. For the purpose of section 10(23C)(iiiad), in the term 'aggregate annual receipts' refers to the receipts by the educational institution and not that of the society.
b. Divine Education Institute & social Development Society Vs. ITO (Del
- Trib) ITA No.3614/Chny/2025 Sivasakthi Educational Trust :- 6 -:
Corpus fund, which is meant for Specific purpose to meet out capital expenditure, cannot be a part of annual receipts of educational institution even if no registration u/s.12AA has been granted.
c. CIT Vs Shanthi Devi Educational Trust (P & H - High Court) Assessing officer was not justified to be included the corpus donations in to aggregate annual receipts.
d. ITO v. Serum Institute of India Research Foundation. (2018) 169 ITD 271 195 TTJ 820 (Pune) (Trib.) Dismissing the appeal of the revenue the Tribunal held that, corpus contributions being capital receipts, cannot be charged to tax though the trust is not registered (AY 2005 - 06).
10. On the basis of principle of law laid down in the aforesaid judgments, it was the prayer of the assessee that since aggregate annual receipt of the school was below Rs.1 Cr., the AO has taken a stand against the provisions and intent of law and facts of the case which was further unjustifiably affirmed by the Ld CIT(A), therefore, it was the prayer of the Ld AR that the order of the Ld.CIT(A) is liable to be quashed and the exemption u/s.10(23C)(iiiad) of the Act deserves to be restored /allowed to the assessee.
11. On the contrary, The Ld.DR vehemently supported the order of the AO & the Ld.CIT(A).
12. We have considered the rival contentions and submissions, perused the materials on record, including judicial pronouncements relied upon. Admittedly, the assessee is a Trust with charitable objects and was granted registration u/s.12AA of the Act, on 03.09.2018 w.e.f. AY 201819. The disallowance of exemption u/s.11 of the Act, was made by the AO considering the fact that the assessee was not having registration u/s.12AA of the Act, for the year under consideration while intimation u/s 143(1) was passed. It was also the fact that the assessee has claimed exemption being an Educational Institution while filing its return of income on 29.09.2014 for the AY 2014-15, but the same was denied vide order u/s.143(1) of the Act dated 28.02.2016. Subsequently, the assessee had filed a petition for rectification u/s.154 of the Act, with the AO, but has not find any favour with a reasoning by the AO that, the assessee did not have registration u/s.12AA of the Act also the exemption u/s.10(23C)(iiiad) of the Act was claimed under rectification petition, the same cannot be considered as a mistake apparent from the record and thus, the rectification petition was rejected. In appeal, findings of the AO were accepted by the Ld.CIT(A) and dismissed the appeal filed by the assessee.
13. In back drop of the above facts and circumstances of the case and on perusal of the judicial pronouncements, as well, it would be relevant to refer to the decision of the Hon'ble Punjab & Haryana High Court the ITA No.3614/Chny/2025 Sivasakthi Educational Trust :- 7 -:
case of CIT (Exemptions) v. Shanti Devi Educational Trust reported in [2018] 409 ITR 522 (P&H), wherein, the Hon'ble Punjab & Haryana High Court has held as under:
EDUCATIONAL INSTITUTION -- EXEMPTION -- REGISTRATION OF TRUST UNDER SECTION 12AA NOT MANDATORY TO CLAIM EXEMPTION UNDER SECTION 10(23C)(iiiad) -- INCOME-TAX ACT, 1961, ss. 10(23C)(iiiad), 12AA. During the course of registration proceedings under section 12AA of the Income-tax Act, 1961 the assessee- trust submitted audited accounts for the financial years 2006-07, 200708 and 2008-09. From the balance-sheet for the financial year 2006-07 relevant to the assessment year 2007-08, it was found that the trust had collected a sum of Rs.1,15,05,100 as corpus fund. The trust was neither registered under section 12AA nor under section 10(23C)(vi) during the assessment year 2007-08. The assessee-trust did not file its return for the assessment year 2007-08 relevant to the financial year 2006-07. A notice under section 148 was issued. The Assessing Officer held that as the assessee was not registered under section 12AA during the assessment year 2007-08, it was not eligible for exemption on account of corpus donation and the excess of receipts over expenditure was added to the taxable income, which was assessed at Rs.1,15,03,000. The Commissioner (Appeals) upheld the additions made by the Assessing Officer. On further appeal, the Tribunal accepted the plea of the assessee that it ran three educational institutions, that it had received donation of agricultural land valued at Rs.1.01 crore by a registered gift deed from V and three others, and that the assessee had received corpus donation of Rs.15 lakhs from three concerns, and held that since it was not the case of the Department that the objects of the assessee-trust were not charitable nor that the donation in the shape of land or amount had been utilized for any other purposes except on the objects of the assessee-trust the Commissioner (Appeals) was not justified in upholding the action of the Assessing Officer and accordingly directed the Assessing Officer to delete the addition treating the assessee as a registered trust with charitable objects. On appeal:
Held, dismissing the appeal, that the Tribunal while setting aside the orders of the authorities below had rightly directed the Assessing Officer to delete the addition treating the assessee as a registered trust with charitable objects. Of course, no educational activity had been started by the assessee during the assessment year 2007-08 but at the same time, the fact that the assets and funds received by it in donation were meant for achieving its objects had not been doubted. The registration under section 12AA had been granted to the assessee by the Commissioner, with effect from April 1, 2009 which was before the date of the assessment order passed on December 30, 2011 though obtaining registration under section 12AA was not mandatory to claim exemption under section 10(23C)(iiiad). According to this provision, any income received by any person on behalf of any university or other educational institution existing solely for educational purposes and not for the purpose of profit was exempt if the aggregate annual receipts of such university or educational institute did not exceed the amount prescribed. The findings of fact recorded by the ITA No.3614/Chny/2025 Sivasakthi Educational Trust :- 8 -:
Tribunal had not been shown to be illegal or perverse, which warranted interference. No question of law arose.
14. The matter in the case of Shanti Devi Educational Trust (supra) was taken up by the revenue for the directions of the Hon'ble Supreme Court vide SLP (Civil) Diary No.10671/2018 dated 20.04.2018, where the SLP of the revenue was dismissed on the ground of delay as well as on merits.
15. In an another case "CIT Vs MADARSA-E-BAKHIYATH-US- SALIHATH ARABIC COLLEGE" reported in [2015] 278 CTR 374 (Madras), wherein, the Hon'ble jurisdictional High Court has held that the sale proceeds of the land and bonds cannot be equated to annual receipts as stated u/s.10(23C) of the Act. The sale in the case on hand is in the nature of conversion of a capital asset from one form to another. Therefore, the denial of benefit of Sec.10(23C) of the Act, by the AO was rightly interfered by the Ld.CIT(A) and confirmed by the Tribunal. Extract of the findings of the Hon'ble jurisdictional High Court guiding on the importance and applicability of provisions of section 10(23C) while computing the annual receipt, were as under:
4. Before adverting to the merits of the case, it is apposite to refer to Section 10(23C)(iiiad) of the Act, which reads as under:
Section 10. Incomes not included in total income.- In computing the total income of a previous year of any person, any income falling within any of the following clauses shall not be included ..... (23C) any income received by any person on behalf of--
(i) to (iiiac) ......
(iiiad) any university or other educational institution existing solely for educational purposes and not for purposes of profit if the aggregate annual receipts of such university or educational institution do not exceed the amount of annual receipts as may be prescribed.
5. We find that in the above said provision the key emphasis is on the words annual receipts. The sale proceeds of land and bonds cannot be equated to annual receipts as stated under Section 10(23C) of the Act.
The sale in the case on hand is in the nature of conversion of a capital asset from one form to another. Therefore, the denial of the benefit of Section 10(23C) of the Act to the assessee by the Assessing Officer was rightly interfered with by the Commissioner of Income Tax (Appeals) and confirmed by the Tribunal.
In such view of the matter, we hold that the appeal is devoid of merits and no substantial question of law arises for our consideration. Accordingly, this appeal is dismissed.
ITA No.3614/Chny/2025Sivasakthi Educational Trust :- 9 -:
16. The judgement in the case of Shiksha Samiti (supra) relied upon by the assesseeis absolutely relevant for the present case, wherein, the assessee's society has corpus receipt of Rs.39,14,102/- and the other receipts of Rs.60,24,857/-,wherein, the AO has wrongly aggregated these two receipts of the society and inferred that the annual receipts of the assessee society have exceeded Rs.1 Cr., therefore, exemption u/s.10(23C)(iiiad) of the Act, cannot be allowed. The addition was made by the AO, however, the same was deleted by the Ld.CIT(A) and the ITAT has also upheld the decision of the Ld CIT(A), held that the amount contributed voluntarily by the donors with specific direction that it will form part of corpus, would not constitute income of the society. Therefore, the annual receipts of educational institutions for the purpose of section 10(23C)(iiiad) were below Rs.1 Cr. and as such exemption u/s.10(23C)(iiiad) of the Act, was allowable.
17. In the case of Divine Education Institute & Social Development Society (Supra), wherein, the co-ordinate bench of ITAT Delhi Bench has held that corpus fund which is meant for specific purpose to meet out capital expenditure, cannot be a part of annual receipt of educational institution, even if no registration u/s.12AA of the Act, has been granted.
18. Respectfully following the above judicial pronouncements, adverting to the submissions and observations as noted hereinabove. After a thoughtful analysis, we are of the considered view that corpus fund received by the assessee with specific directions cannot be treated as receipt for the purpose of Sec.10(23C)(iiiad) of the Act, and therefore, the total receipt of the assessee for the relevant assessment year was below the prescribed limit of Rs.1 Cr. for the purpose of exemption claimed under the provisions of section 10(23C)(iiiad) of the Act. Accordingly, the assessee's Trust was eligible for exemption u/s.10(23C)(iiiad) of the Act, even if no registration u/s.12AA of the Act was in existence or granted for the impugned assessment year, wherein receipt of the society working solely for educational purpose was below Rs.1 Cr.
19. To clarify it further relevant provisions of Sec.10(23C)(iiiad) of the Act, is re-produced as under:
"any university or other educational institution existing solely for educational purposes and not for purposes of profit if the aggregate annual [receipts of such university or educational institution do not exceed the amount of annual receipts as may be prescribed]".
Note: Prescribed limit is Rs.1 Cr. for the AY 2014-15.
20. In view of the aforesaid discussion, observations, judicial pronouncements and provisions of the Act, in the present case, after a thoughtful consideration, we are of the opinion that the assessee trust was undeniably entitled for exemption u/s.10(23C)(iiiad) of the Act, for which, the mistake was apparent from the record of the assessee, which were ITA No.3614/Chny/2025 Sivasakthi Educational Trust :- 10 -:
already in possession with the authorities below. However, they have considered the corpus donation also as receipt of the assessee for the purpose of Sec.10(23C)(iiiad) of the Act, and denied exemption to the assessee. Therefore, having no contrary submissions or decisions placed before us by the revenue, as against the judgments cited above, we hold the orders of the Revenue authorities as unsustainable. Consequently, we set aside the order of the authorities below and are directing the AO to grant exemption u/s.10(23C)(iiiad) of the Act, to the assessee."
6. The ratio laid down by the Coordinate Bench in the above case is that for the purpose of section 10(23C)(iiiad) of the Act, the receipts towards corpus donations given for a specific purpose cannot be included while computing the monetary limit. In the present case, from the perusal of financial statements, we notice that the receipts from the trustees are towards corpus for the purpose of construction of school building and that the assessee has carried the contributions in the balance sheet as receipts towards the corpus of the assessee's trust. We also notice that the receipts of the assessee is less than Rs.1 crore when the contributions of the trustees towards corpus is excluded. Therefore, applying the ratio laid down by the Coordinate Bench in the above case, we hold that the A.O is not correct in denying the exemption u/s. 10(23C)(iiiad) of the Act on the ground that the assessee's receipts have exceeded the limit prescribed i.e, Rs. 1 Crore. On the contention of the A.O that the assessee has not incurred any expenditure for the educational purpose, we notice from the perusal of the financial statements that the assessee has incurred expenses towards teachers' salary, shoes and uniform expenses, transportation charges etc. We also notice that the assessee has obtained the provisional order to run the nursery school from Primary Educational Officer, Nagapattinam on 13.04.2018 and copy of NOC dated 08.03.2019 issued by Director School Education, Tamil Nadu for applying affiliation to Central Board of Secondary Education (Page 3 to 15 of paper book). Therefore, we ITA No.3614/Chny/2025 Sivasakthi Educational Trust :- 11 -:
see merit in the submission of the Ld. AR that the assessee has started running the school for nursery students and that the assessee in the process of expanding its objects of education purpose by constructing a building to run CBSE school. Accordingly, we are of the considered view that the A.O is not correct in denying the exemption on the ground that the assessee has not substantiated the claim that it is established for the purpose of education for the purpose of claiming exemption u/s. 10(23C)(iiiad) of the Act. We thus direct the A.O to allow the exemption claimed by the assessee in the return of income.
7. In the result, the appeal of the assessee is allowed.
Order pronounced on 16th day of April, 2026 at Chennai.
Sd/- Sd/-
(एबी टी. वक ) (पदमावती यस)
(ABY. T. Varkey) (Padmavathy.S)
याियक सद य / Judicial Member लेखा सद य /Accountant Member
th
चे नई/Chennai, दनांक/Dated: 16 April, 2026.
EDN, Sr. P.S
आदे श क ितिल प अ े षत/Copy to:
1. अपीलाथ /Appellant
2. थ /Respondent
3. आयकर आयु /CIT, Chennai/Madurai/Coimbatore/Salem
4. िवभागीय ितिनिध/DR
5. गाड फाईल/GF